Wells Fargo was imposed a limit on loan writing – which may cost it $400 million this year – and other growth restrictions as part of the Fed’s sanctions against the bank for failing to catch 3.5 million fake accounts. The Fed has never before placed a firmwide limit on a bank. However, the financial impact may be less than 2% of its total 2017 earnings of $22 billion, and if it successfully passes a review in September, it’s possible that stock declines could be the end of the firm’s financial worries. The challenge for the bank will be to endure the penalties while its rivals are freer to lend and grow than they have been for years.
The sanctions against Wells Fargo are so unusual, no one knows what to think